Dayen writes: "Eric Holder has long insisted that he tried really hard when
he was attorney general to make criminal cases against big banks in the wake
of the 2007 financial crisis. His excuse, which he made again just last
month, was that Justice Department prosecutors didn't have enough evidence
to bring charges."
Eric Holder. (photo: Chip Somodevilla/Getty Images)
Eric Holder's Longtime Excuse for Not Prosecuting Banks Just Crashed and
Burned
By David Dayen, The Intercept
12 July 16
Eric Holder has long insisted that he tried really hard when he was
attorney general to make criminal cases against big banks in the wake of the
2007 financial crisis. His excuse, which he made again just last month, was
that Justice Department prosecutors didn't have enough evidence to bring
charges.
Many critics have long suspected that was bullshit, and that Holder, for a
combination of political, self-serving and craven reasons, held his
department back.
A new, thoroughly-documented report from the House Financial Services
Committee supports that theory. It recounts how career prosecutors in 2012
wanted to criminally charge the global bank HSBC for facilitating money
laundering for Mexican drug lords and terrorist groups. But Holder said no.
When asked on June 8 why his Justice Department did not equally apply the
criminal laws to financial institutions in the wake of the 2008 economic
crisis, Holder told the platform drafting panel of the Democratic National
Committee that it was laboring under a "misperception."
He told the panel: "The question you need to ask yourself is, if we could
have made those cases, do you think we would not have? Do you think that
these very aggressive U.S. Attorneys I was proud to serve with would have
not brought these cases if they had the ability?"
The report - the result of a three-year investigation - shows that
aggressive attorneys did want to prosecute HSBC, but Holder overruled them.
In September 2012, the Justice Department's Asset Forfeiture and Money
Laundering Section (AFMLS) formally recommended that HSBC be prosecuted for
its numerous financial crimes.
The history: From 2006 to 2010, HSBC failed to monitor billions of dollars
of U.S. dollar purchases with drug trafficking proceeds in Mexico. It also
conducted business going back to the mid-1990s on behalf of customers in
Cuba, Iran, Libya, Sudan, and Burma, while they were under sanctions. Such
transactions were banned by U.S. law.
Newly public internal Treasury Department records show that AFMLS Chief
Jennifer Shasky wanted to seek a guilty plea for violations of the Bank
Secrecy Act. "DoJ is mulling over the ramifications that could flow from
such an approach and plans to finalize its decision this week," reads an
email from September 4, 2012 to senior Treasury officials. On September 7,
Treasury official Dennis Wood describes the AFMLS decision as an "internal
recommendation to ask the bank [to] plead guilty." It was a "bombshell,"
Wood wrote, because of "the implications of a criminal plea" and "the sheer
amount of the proposed fines and forfeitures."
But after British financial minister George Osborne complained to the
Federal Reserve chairman and the Treasury Secretary that DOJ was unfairly
targeting a British bank, senior Justice Department leadership reportedly
sought to "better understand the collateral consequences of a
conviction/plea before taking such a dramatic step."
The report documents how Holder and his top associates were concerned about
the impact to the global economy of prosecuting HSBC. And in particular,
they worried that a guilty plea would trigger a hearing over whether to
revoke HSBC's charter to do banking in the United States.
According to internal documents, DOJ then went dark for nearly two months,
refusing to participate in interagency calls about HSBC. Finally, Holder
presented HSBC on November 7 with a "take it or leave it" offer of a
deferred prosecution agreement, which would involve a cash settlement and
future monitoring of HSBC.
No guilty plea was required.
But even the "take it or leave it" offer was apparently not the last word.
HSBC was able to negotiate for nearly a month after Holder presented that
offer, getting more favorable terms in the ultimate $1.9 billion deferred
prosecution agreement, announced on December 11, 2012.
The original settlement documents would have forced any HSBC executive
officers to void their year-end bonuses if they showed future failures of
anti-money laundering compliance. The final documents say that, in the event
of such failures, senior executives merely "could" have their bonuses clawed
back.
In addition, HSBC successfully negotiated to have individual executives
immunized from prosecution over transactions with foreign terrorist
organizations and other sanctioned entities, even though the original
agreement only covered the anti-money laundering violations and explicitly
left open the possibility of prosecuting individuals.
As a Justice Department functionary in 1999, Holder wrote the infamous
"collateral consequences" memo, advising prosecutors to take into account
economic damage that might result from criminally convicting a major
corporation.
In 2013, he unwittingly earned his place in history for telling the Senate
Judiciary Committee, "I am concerned that the size of some of these
[financial] institutions becomes so large that it does become difficult for
us to prosecute them," which became known as the "Too Big to Jail" theory.
Holder told the Democratic platform drafting committee that "it was not lack
of desire or lack of resources" that led to the lack of prosecutions for any
major bank executive following the financial crisis. "We had in some cases
statutory and sometimes factual inabilities to bring the cases that we
wanted to bring," he said.
The HSBC case, however, shows that lack of desire at the highest levels of
the Justice Department was indeed the primary reason that no prosecutions
took place.
Former Congressman Brad Miller, who also testified to the drafting
committee, cited the HSBC case as an example of the lack of equal
application of justice in the Holder era. Referring to the concern over
destabilizing the financial system with an HSBC prosecution, Miller said,
"That's not an argument that's available to too many people: 'You can't
arrest me for selling cigarettes, it might destabilize the financial
system!' "
The internal communications in the House report all come from the Treasury
Department. The Justice Department, they say, did not comply with subpoenas
for information about the settlement.
Holder is returned to Covington & Burling, a corporate law firm known for
serving Wall Street clients in 2015. He had worked at Covington from 2001
until he was sworn in as attorney general in Feburary 2009. Covington
literally kept an office empty for him, awaiting his return.
Jennifer Shasky, the AFMLS Chief who requested the prosecution of HSBC but
was overruled, recently resigned as the head of the Financial Crimes
Enforcement Network to become a senior compliance officer with HSBC.
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Eric Holder. (photo: Chip Somodevilla/Getty Images)
https://theintercept.com/2016/07/12/eric-holders-longtime-excuse-for-not-pro
secuting-banks-just-crashed-and-burned/https://theintercept.com/2016/07/12/e
ric-holders-longtime-excuse-for-not-prosecuting-banks-just-crashed-and-burne
d/
Eric Holder's Longtime Excuse for Not Prosecuting Banks Just Crashed and
Burned
By David Dayen, The Intercept
12 July 16
ric Holder has long insisted that he tried really hard when he was attorney
general to make criminal cases against big banks in the wake of the 2007
financial crisis. His excuse, which he made again just last month, was that
Justice Department prosecutors didn't have enough evidence to bring charges.
Many critics have long suspected that was bullshit, and that Holder, for a
combination of political, self-serving and craven reasons, held his
department back.
A new, thoroughly-documented report from the House Financial Services
Committee supports that theory. It recounts how career prosecutors in 2012
wanted to criminally charge the global bank HSBC for facilitating money
laundering for Mexican drug lords and terrorist groups. But Holder said no.
When asked on June 8 why his Justice Department did not equally apply the
criminal laws to financial institutions in the wake of the 2008 economic
crisis, Holder told the platform drafting panel of the Democratic National
Committee that it was laboring under a "misperception."
He told the panel: "The question you need to ask yourself is, if we could
have made those cases, do you think we would not have? Do you think that
these very aggressive U.S. Attorneys I was proud to serve with would have
not brought these cases if they had the ability?"
The report - the result of a three-year investigation - shows that
aggressive attorneys did want to prosecute HSBC, but Holder overruled them.
In September 2012, the Justice Department's Asset Forfeiture and Money
Laundering Section (AFMLS) formally recommended that HSBC be prosecuted for
its numerous financial crimes.
The history: From 2006 to 2010, HSBC failed to monitor billions of dollars
of U.S. dollar purchases with drug trafficking proceeds in Mexico. It also
conducted business going back to the mid-1990s on behalf of customers in
Cuba, Iran, Libya, Sudan, and Burma, while they were under sanctions. Such
transactions were banned by U.S. law.
Newly public internal Treasury Department records show that AFMLS Chief
Jennifer Shasky wanted to seek a guilty plea for violations of the Bank
Secrecy Act. "DoJ is mulling over the ramifications that could flow from
such an approach and plans to finalize its decision this week," reads an
email from September 4, 2012 to senior Treasury officials. On September 7,
Treasury official Dennis Wood describes the AFMLS decision as an "internal
recommendation to ask the bank [to] plead guilty." It was a "bombshell,"
Wood wrote, because of "the implications of a criminal plea" and "the sheer
amount of the proposed fines and forfeitures."
But after British financial minister George Osborne complained to the
Federal Reserve chairman and the Treasury Secretary that DOJ was unfairly
targeting a British bank, senior Justice Department leadership reportedly
sought to "better understand the collateral consequences of a
conviction/plea before taking such a dramatic step."
The report documents how Holder and his top associates were concerned about
the impact to the global economy of prosecuting HSBC. And in particular,
they worried that a guilty plea would trigger a hearing over whether to
revoke HSBC's charter to do banking in the United States.
According to internal documents, DOJ then went dark for nearly two months,
refusing to participate in interagency calls about HSBC. Finally, Holder
presented HSBC on November 7 with a "take it or leave it" offer of a
deferred prosecution agreement, which would involve a cash settlement and
future monitoring of HSBC.
No guilty plea was required.
But even the "take it or leave it" offer was apparently not the last word.
HSBC was able to negotiate for nearly a month after Holder presented that
offer, getting more favorable terms in the ultimate $1.9 billion deferred
prosecution agreement, announced on December 11, 2012.
The original settlement documents would have forced any HSBC executive
officers to void their year-end bonuses if they showed future failures of
anti-money laundering compliance. The final documents say that, in the event
of such failures, senior executives merely "could" have their bonuses clawed
back.
In addition, HSBC successfully negotiated to have individual executives
immunized from prosecution over transactions with foreign terrorist
organizations and other sanctioned entities, even though the original
agreement only covered the anti-money laundering violations and explicitly
left open the possibility of prosecuting individuals.
As a Justice Department functionary in 1999, Holder wrote the infamous
"collateral consequences" memo, advising prosecutors to take into account
economic damage that might result from criminally convicting a major
corporation.
In 2013, he unwittingly earned his place in history for telling the Senate
Judiciary Committee, "I am concerned that the size of some of these
[financial] institutions becomes so large that it does become difficult for
us to prosecute them," which became known as the "Too Big to Jail" theory.
Holder told the Democratic platform drafting committee that "it was not lack
of desire or lack of resources" that led to the lack of prosecutions for any
major bank executive following the financial crisis. "We had in some cases
statutory and sometimes factual inabilities to bring the cases that we
wanted to bring," he said.
The HSBC case, however, shows that lack of desire at the highest levels of
the Justice Department was indeed the primary reason that no prosecutions
took place.
Former Congressman Brad Miller, who also testified to the drafting
committee, cited the HSBC case as an example of the lack of equal
application of justice in the Holder era. Referring to the concern over
destabilizing the financial system with an HSBC prosecution, Miller said,
"That's not an argument that's available to too many people: 'You can't
arrest me for selling cigarettes, it might destabilize the financial
system!' "
The internal communications in the House report all come from the Treasury
Department. The Justice Department, they say, did not comply with subpoenas
for information about the settlement.
Holder is returned to Covington & Burling, a corporate law firm known for
serving Wall Street clients in 2015. He had worked at Covington from 2001
until he was sworn in as attorney general in Feburary 2009. Covington
literally kept an office empty for him, awaiting his return.
Jennifer Shasky, the AFMLS Chief who requested the prosecution of HSBC but
was overruled, recently resigned as the head of the Financial Crimes
Enforcement Network to become a senior compliance officer with HSBC.
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